OECD MINISTERIAL SYMPOSIUM
ON THE FUTURE OF PUBLIC SERVICES
TUAC DISCUSSION PAPER
Introduction and Summary
The OECD Ministerial Symposium on the Future of Public Services meets at
a crucial time. Public services across the OECD are under pressure from a
variety of sources. In some countries the public sector has faced an
ideological onslaught. Elsewhere services have been cut back by the drive to
reduce public deficits and respond to globalisation. Whatever the motivating
force for change, the impact is often felt by the users of services who are
least able the fend for themselves, as well as by public service workers
whose wages and terms of employment are frequently undermined to achieve
Meanwhile changes in demographic trends and consumer preferences are
increasing the demand for public services in areas such as community care
for the elderly, health care, continuing education and environmental
services. Much of this demand will continue to have to be met by the public
sector, which for many services is best situated to deliver efficiency,
effectiveness, universality and equity simultaneously.
The debate on these issues should be conducted in a pragmatic way and
free from the ideology that has dogged past discussions. It should include a
thorough evaluation of the scope, role and structure of public services (including
municipal services and public utilities) in their support for the economy,
and the extent to which market mechanisms can deliver quality services alone
or in partnership with the public sector. The impact of all policies on
social cohesion must be considered.
This TUAC paper focuses on the "partnership" approach to
reforms in the public sector. In essence, the "partnership"
approach is based on an understanding that public service employees, whether
directly employed by public authorities, or by private sector providers, are
stakeholders (along with users, taxpayers and governments) with views and
opinions that must be accounted for when decisions are taken on the future
direction of the services that they produce and deliver. Section One of the
paper discusses the trade union view of the scope, role and structure of
government. Section Two sets out the TUAC "partnership" approach
to public service management and reform, and presents some examples of
"good practice". Section Three sets out proposals for future OECD
work in this area.
1. The Scope Role and Structure of Government
|Globalisation and the Role of Government
The scope, role and structure of government in the economy is now the
subject of intense debate across the OECD. Good public services
contribute to a nation's competitiveness. They contribute to the social
cohesion necessary to make an economy function. They instill confidence
and security in the labour force for managing change and so contribute
to the dynamic efficiency and adaptability of the labour market.
Ultimately economies are made up of end users where social factors
Yet some policy advisors approach public services from an ideological
standpoint arguing that less government per se is better for a
market economy to function. This perception has been part of the ongoing
debate on economic globalisation. It is argued that by cutting or
holding down taxes and state borrowing it will be possible to increase
an economy's national competitiveness in the global market place.
Countries, in addition to companies, are in competition with one another.
The short-term winners, in terms of attracting foreign direct investment
and multinational enterprises, and increasing domestic investment (thereby
increasing employment), will be those that offer competitive corporate
tax regimes, and an "enterprise culture" based on minimum
government intervention in and regulation of the economy. Such a view is
Global financial markets are also forcing governments to rethink
their role in the economy. To attain "credibility" and thereby
reduce pressure on long-term interest rates, at a minimum, the
"structural" element of government budgets should balance. In
the present context this means fiscal retrenchment.
In tandem with global pressures on finance there is claimed to be a
spontaneous domestic political pressure to cut or hold down taxes. One
further source of pressure is demographic change, with declining
participation rates and increasing dependency ratios forcing a rethink
of welfare systems, including health, education and state pension
|Financing Public Services
The outcome of this drive for smaller government is that public
services and the financing of them comes under pressure. However, this
is not a new phenomenon as shown by the reorientation since the early
1980s of government thinking on the ownership, control and financing of
many public sector operations. Key public sector utilities or services
have been, or are being privatised, often with their monopoly status
intact. Contracting out, outsourcing and moves towards unfunded
decentralised provision of services are other ways in which governments
have sought to reduce their role in and, responsibility for, the costs
of public services. In association, the use of market mechanisms in the
production and delivery of services has grown.
|The Limits to Market Mechanisms in Public Services and Learning the
Trade union experience of these experiments in public sector and
service provision show that in many instances the limits to market
mechanisms in the provision of public services have been reached, and in
other instances they have inflicted economic and social damage. That is
not to say that market mechanisms do not have a key role to play here.
On the contrary, TUAC sees an essential role for the private sector.
However, policy makers should understand the circumstances required to
make a mixed system deliver quality public services.
Prior to reforms being made, a thorough cost benefit analysis should
be undertaken. In addition to an evaluation of cost savings, this
exercise should also evaluate the likely long-term impact of reforms on
the quality and effectiveness of services and their likely effects on
equity. The analysis should also include the human dimension, which
includes the effects on workers, whether in terms of wages, and general
conditions of employment, including hours of work, training, promotion,
and equal opportunities, as well as user and service considerations.
2. Managing for the Future: The Trade Union "Partnership Approach"
to Public Service Management and Reform
Workers and their trade unions have been portrayed as barriers to
change in the public sector. Where this has been true, it has often been
for good reasons. Reforms have often been introduced without prior
consultation and the involvement of workers and their representatives in
the change process. Moreover, reforms have sometimes been introduced
with the explicit aim of cutting workers' wages and conditions of
employment -- as the only way to achieve cost savings. Counter arguments
on the long-term effects of or alternatives to such moves are then
portrayed as barriers to change -- with the added dimension that workers
and trade unions are viewed as opponents of change. In practice,
managers faced with reforms which are not working, may then have to
introduce costly remedial changes, usually along the lines of those
suggested by unions, to rectify emerging problems.
Recognising this, many public service trade unions are now acting in
a proactive way to promote desirable changes. In many cases trade unions
are at the forefront of change and proposing reforms, sometimes in the
face of opposition from public authorities and management. TUAC has
called for a "partnership" approach to change, which is not
about change for the sake of change, but about all the parties working
together in advance of change, to identify the objective conditions
necessary to deliver quality public services which satisfy taxpayers,
the demands of service users and the staff that deliver them. This may
or may not mean the extension of market mechanisms into the production
and delivery of services.
|The "Partnership" Approach to Public Sector Reform: "Best
Practice" Case Studies
The following examples are illustrative of the many innovative ways
in which public service trade unions are proposing reforms, and working
with management and the public authorities to effect change.
|The German Trade Union "Partnership" Approach to Change:
A trade union-led initiative in Hagen near Dusseldorf has now made it
possible for citizens to apply for a passport, renew a driving licence,
order theatre tickets, and have access to a further 32 services at a new
one-stop municipal service shop. The architect of this initiative is the
OTV, the German public service union that persevered to effect change in
the face of opposition from certain local politicians, fearful of the
Following a national conference of the OTV in 1988, a policy paper, 'Shaping
the Future through Public Services' was developed which led to further
policy papers in three areas: reform of public management, the role of
public companies in promoting sustainable economic growth, and the
future of health and social services. From this, local initiatives were
developed, including Hagen, where the focus would be on improved
municipal information and advice services.
After six months of detailed research a plan for a one-stop shop was
developed, where citizens would no longer have to go to a variety of
offices for different services, but could access them through a single
office. A training plan was implemented, such that staff would be
familiar with all services on offer, and not just a few as in the past.
In addition, a plain language 'info list' was developed to aid staff and
customers. In agreement with staff the office was to be open to the
public for 45 hours a week -- more than twice as long as was previously
the case for individual offices.
Unfortunately, the initiative did lead to a loss of ten jobs, but no
worker faced compulsory redundancy. Moreover, without the trade union
led initiative, and if management had unilaterally imposed change when
faced with budget cuts, the outcome could have been worse.
Overall, however, the project has been judged an economic success.
The initiative has been welcomed by the public, as shown by the feedback
from a user opinion survey that showed overwhelming support for the
one-stop shop. The public authority, once its initial hostility was
overcome has also gained, in that cost savings have been made. Staff
have benefited too, through improved job satisfaction and greater
empowerment over their working lives. Democratic quality circles have
been initiated, and old managerial hierarchies abolished, with
front-line staff being involved in the design and delivery of services,
and the organisation of their own working time. The union is also
reviewing its own structure to identify those support mechanisms that
work for its members in the new workplace.
|The Swedish Trade Union "Partnership" Approach to Change:
In the late 1980s, the SKAF, the Swedish municipal workers' union,
was faced by cuts in local authority budgets. Understanding that the
traditional response would be for a combination of cuts in the level of
services and staff or privatisation, the union developed its own project
that would both save money for local authorities and preserve jobs.
Following extensive discussions with its membership the following model
was tested in 1991 in the municipality of Malung, where the goal was to
achieve a minimum of 10 per cent cost savings for the authority over 3
years while saving jobs.
The union model is based on the active involvement of all employees
in a workplace based project. Work groups of between 8-12 people are
initiated, each with an elected leader. In addition, one person is
appointed to coordinate the groups and to liaise with management. In
essence the workers and the union own the project.
A worker education package delivered by SKAF and then purchased by
the municipality is developed which focuses on the following seven areas
|the economy, where the budget is broken down to make it accessible
and understandable to each employee. Workers then understand the
cost of their own and the workplace activity, and their role in
providing an efficient service;
|planning and follow-up, where small units learn to plan for
cooperation and coordination, and knowledge sharing, rather than
"stealing" ideas and resources from each other in a
competitive manner. Agreement is sought on an overall policy with
common goals for better production;
|communications and information, where hierarchical decision making
structures are broken down and replaced with flatter horizontal
structures that empower workers;
|public procurement, where agreement is sought to determine the
level at which purchasing decisions are made for each unit;
|competence development, where a cataloguer of training for each
employee is devised. The aim here is to preserve professional
knowledge and experience, while learning new skills;
|ethics and the human dimension, where employees' opinions of their
work alters with increased responsibility for their own initiatives.
This allows personal development alongside increased productivity
with an emphasis on quality; and
|organisation, where structural adjustments are made to tailor the
organisation to meet local needs.|
Eight to ten months are then spent in analysing the present situation
or perceived problems within the organisation. Having identified the
strengths and weaknesses of the organisation, concrete proposals for
change are then formulated and presented to management on the
understanding that unless agreed savings are made within a specific
time, the municipality is refunded its money. However, the pilot project
in Malung achieved cost savings of over 10 per cent, maintained
employment levels, improved services and enriched the lives of the
workers. Following its success in Malung, the SKAF has formed a special
development unit for this department and has sold the package to over 65
municipalities and counties, thus raising revenue for the union.
|The Irish Trade Union "Partnership" Approach to Change:
As part of a series of agreements between the government, employers
and trade unions, including the teacher unions, since 1987, a process of
the development and renewal of the Irish education system has been
undertaken. Each of the agreements on social and economic policy
included a section on education which was agreed between the teacher
unions, the government Department of Education and the employers. These
agreements addressed different aspects of the development and
improvement of the education system including the link between education
and employment and the stance that might be taken to develop the
education system in such a way which would improve the opportunities for
the employment of students. The agreements placed a strong emphasis on
equity and access to educational facilities for all. They promoted adult
and continuing education and the targeting of resources towards the
education of the disadvantaged.
Partly as a consequence of the progress made under these agreements,
a process of review and renewal of the education system as a whole began
which culminated in the publication in 1995 of a government White Paper
on Education. This was the first major attempt at reflection,
redevelopment and redirecting of the education system since the
foundation of the Irish State. The White Paper was developed through a
process of consultation with all of the educational interests and the
social partners. This was an unprecedented attempt to gain support by
consensus in society generally on the future of the education system. It
involved the publication of a Green Paper to which all interested
parties were invited to respond, a major National Convention on
Education attended by all interested parties, further conferences on
specific topics and finally, the publication of the White Paper based on
the submissions and discussions. A further process of consultation is
taking place currently on the implementation of various aspects of the
White Paper, which contains a commitment that direct negotiations will
take place between the teacher unions, the employers and the Department
of Education regarding those aspects of the proposals directly affecting
their terms and conditions of employment.
Teachers are represented on all committees and working parties that
address curricular issues. The White Paper is a wide-ranging document
dealing with the philosophical principles underlying the Irish education
service, the structures through which the service is delivered, the
future of the teaching profession and developing systems for monitoring
and evaluating all aspects of the education service.
|Long-Term Planning for Public Services
The above examples of the trade union "partnership"
approach to change in public services focus mainly on local or sectoral
cases. However, trade unions do have a stake in broad macroeconomic
issues that encompass long-term planning for public services. The trade
union experience here offers a rich vein of "best practice"
for the OECD to examine.
One such example comes from Australia, where the Commonwealth
government has since 1983 worked in "partnership" with the
ACTU, the national council of trade unions to formulate a series of
Accords which have transformed the economy, the labour market and the
trade union structure. Successive Accords have introduced broad fiscal
reforms which have encompassed taxation, health and pension provision,
childcare and family protection alongside the introduction of a safety
net of basic societal protection to prevent major social groups falling
outside the system.
What is different about the Australian example is that through the
active involvement of trade unions the Commonwealth budget will over the
medium term move to balance on the basis of an equitable tax base for
all, but without sweeping cuts in public service provision. Wage
moderation has contributed to this, allowing inflation to fall to
historically low levels, as part of a wider agenda including job
creation. When combined, these elements have increased tax revenue, thus
increasing resources for public services and the social wage, while
putting a lid on price rises in public sector inputs.
The lesson here is that trade unions can and do play a constructive
role in all elements of the macroeconomy, including public services.
These issues, however need to be approached as part of a broad strategy
3. Next Steps for The OECD
This TUAC discussion paper has highlighted several of the many innovative
examples where trade unions are playing a key role in introducing and
managing reform in the public sector and service provision, whether at the
macro or microeconomic levels. In all cases, benefits have accrued in terms
of cost savings to public authorities, a better provision of service to
consumers and better wages and working conditions for employees.
TUAC believes that more needs to be done, and that the OECD has a unique
role to play. The Ministerial Symposium on the future of public services
should discuss the trade union "best practice" examples of public
sector reform, and disseminate them amongst their Ministries for similar
action at home.
TUAC was concerned that the OECD Public Management Committee (PUMA) was
not more fully involved in the design and follow-up work to the Jobs Study,
especially in view of the large role played by public services in national
economies, and in overall employment. However, the concerns of policy makers
in relation to the future of public services provides an opportunity for the
PUMA to initiate a thematic review in conjunction with other departments on
service sector employment growth.
Overall, the thematic review could focus on the dynamic role of the
public sector in a modern economy, including its role in employment
generation and long-term financial planning. Included here should be an
analysis of past public sector reforms to ascertain what has and has not
worked, especially in relation to the introduction of market mechanisms. On
this, the OECD could develop a methodology that allows a meaningful
comparison to be made between public and private providers, including a
comparative measurement of aspects such as quality, inputs, outcomes,
processes, and externalities. A further element for the review relates to
the way in which some governments are introducing public and private sector
"partnerships" in the production and delivery of public services.
The OECD could play a key role by evaluating such schemes, and disseminating
"best practice". A systematic review of the way in which trade
unions have been a part of the change process, as noted above, should also
be included. TUAC and its affiliates would be willing to make a contribution
to such a thematic review.